The move follows an HM Treasury review, published in December 2014, of the enforcement decision making process at the FCA and Prudential Regulation Authority.

As a result of that review, the FCA said it had committed to publishing updated referral criteria and to set out more clearly the process by which decisions to refer cases to enforcement are taken.

The FCA said it wanted to make clear that by opening an investigation, it does not mean it has decided that a breach has been committee or decided what type of enforcement action it might take.

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Georgina Philippou, acting director of enforcement and market oversight at the FCA, said: "Enforcement is not the only tool at our disposal where we see misconduct by firms or individuals, nor is it the most appropriate one to use in every case. Today’s publication will make our decision making process more transparent. Firms and the public will now have a clearer understanding of the questions we ask ourselves before we start a formal investigation."

When deciding whether to investigate, the FCA said that it considers the following three overarching questions:

1. Is an enforcement investigation likely to further the FCA’s aims and statutory objectives?
2. What is the strength of the evidence and is an enforcement investigation likely to be proportionate?
3. What purpose or goal would be served if the FCA were to take enforcement action in this case?

The FCA will publish a consultation paper later this year setting out how it plans to implement other recommendations made in the review.